Primerica 2010 Annual Report - Direct Selling News

Other distributed product expenses andcommissions. Other distributed productexpenses and commissions decreased $36.5million, or 44%, to $46.2 million for the yearended December 31, 2009 from $82.6 millionfor the year ended December 31, 2008. Thisdecrease resulted primarily from a decline incommissions expense associated with decliningsales of loan products.Goodwill impairment. We recognized a $195million goodwill impairment charge resultingfrom a determination, based on impairmenttesting as of December 31, 2008, thatmaintaining the goodwill balance wasunsupportable in light of the deterioration infinancial markets and weak economic outlookat that time, among other factors.Other unallocated corporate expenses.Other unallocated corporate expensesdecreased $17.4 million, or 23%, to $56.9million for the year ended December 31, 2009from $74.3 million for the year endedDecember 31, 2008. This decrease primarilyreflected the impact of $9.5 million in retentionbonuses paid in 2008, a $2.1 million reductionin incentive compensation and staffing relatedexpenses (including salaries and benefits) in2009, and a $2.0 million reduction in printingcosts due to decreased sales of printing toother Citi affiliates.For additional segment information, see Note 3to our consolidated and combined financialstatements.FINANCIAL CONDITIONInvestmentsWe have an investment committee composedof members of our senior management teamthat is responsible for establishing andmaintaining our investment guidelines andsupervising our investment activity. Ourinvestment committee regularly monitors ouroverall investment results and our compliancewith our investment objectives and guidelines.We use a third-party investment advisor tomanage our investing activities. Our investmentadvisor reports to and is supervised by ourinvestment committee.We follow a conservative investment strategydesigned to emphasize the preservation of ourinvested assets and provide adequate liquidityfor the prompt payment of claims. In an effortto meet business needs and mitigate risks, ourinvestment guidelines provide restrictions onour portfolio’s composition, including limits onasset type, sector limits, credit quality limits,portfolio duration, limits on the amount ofinvestments in approved countries andpermissible security types. We may also directour investment managers to invest some of ourinvested asset portfolio in currencies otherthan the U.S. dollar. For example, a portion ofour portfolio is invested in assets denominatedin Canadian dollars which, at minimum, wouldequal our reserves for policies denominated inCanadian dollars. Additionally, to help ensureadequate liquidity for payment of claims, wetake into account the maturity and duration ofour invested asset portfolio and our generalliability profile.Our invested asset portfolio is subject to avariety of risks, including risks related togeneral economic conditions, market volatility,interest rate fluctuations, liquidity risk andcredit and default risk. Investment guidelinerestrictions have been established in an effortto minimize the effect of these risks but maynot always be effective due to factors beyondour control. Interest rates are highly sensitiveto many factors, including governmentalmonetary policies, domestic and internationaleconomic and political conditions and otherfactors beyond our control. A significantincrease in interest rates could result insignificant losses, realized or unrealized, in thevalue of our invested asset portfolio.Additionally, with respect to some of ourinvestments, we are subject to prepayment and,therefore, reinvestment risk.98 Freedom Lives Here TM